CNP - Centro Properties Group

Anybody have any thoughts on this stock?

They just released an ann reporting healthy retail sales growth and the sp is at an all time high...

Now I'm wondering if anyone has any thoughts on this stock as it has be falling for the last 2 months. Is it a good time to jump on board, is it nearing its bottom? Any support? Does anyone think the can be as big as Westfield? How many shares have been issued? Thanks.

Centro Properties Group is a retail property investment and services organisation.

Centro has become one of Australia’s leading property owners with a portfolio valued in excess of $2.4 billion. Ownership interest is held in 30 shopping centres across main population areas in five states; with over 2,610 specialty stores, gross lettable area of 823,433 square metres and annual sales in excess of $3.1 billion.

Retail property under management, following acquisition of the MCS Property business is nearly $5.2 billion, and with the inclusion of the recently announced acquisition in California, USA, is over 6 billion. CT Retail has now been delisted and its properties acquired by Centro and Prime. Centro is now well established in the property syndication business, an area with assets under management of $2.1 billion and presenting great future opportunities.

Is it me, or can others see the begginings of a triple bottom reversal? Support at 7.25 level seems strong. Will have to wait and see what happens when/if rally reaches near 8.25 level:

apra143 said:

Is it me, or can others see the begginings of a triple bottom reversal? Support at 7.25 level seems strong. Will have to wait and see what happens when/if rally reaches near 8.25 level:

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Hi it still may be a bit pricey atm, but a reversal looks likely even lookign at the fundamentals (EPS forecasts)

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 58.7 47.3 50.4 53.8
DPS 39.8 47.3 50.5 54.1

thx

MS

Wow CNP have been hit hard by the credit crunch. They have revised FY08 profit forecasts down to 40.6c from 47c per share, based on higher borrowing costs and no new external fund inflows. They have also canceled the Dec 07 distribution and will look sell some core assets. In addition to this the company must now refinance A$1.3b worth of long term debt.

At this stage the stock is down some 70% (!) at about 1.80, compared to the most recent (06/07) book value of about 3.50. Given the size and track record of this company, does anybody think the selling has been slightly overdone by worried investors? Conversely, do you think that this may be a warning indicator of things to come for '08?

I for one think it has been oversold. I bought in at market opening at 2.30 and was considering again a buy when it dropped below 1.60.

Besides the cancellation of the distribution and the withdrawal suspension, there is really no new news. We have known about these refinancing problems for months.

40c per share profit forcast and a share price of $1.65 is damn good.

Keep in mind that besides todays drop, it has fallen 85% since may.
According to my basic stats its market cap is only 1.3bil

Is it really worth 1/20th the value of westfields??? When it it manages of 26bil

waz said:

Besides the cancellation of the distribution and the withdrawal suspension, there is really no new news.

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ROTFL!

Analogous to someone saying: Besides finding out about the liver cancer and Crohn's Syndrome, I'm in excellent health!

LOL

waz said:

Is it really worth 1/20th the value of westfields??? When it it manages of 26bil

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I think the real issue is the difference between manage and ownership, what, if they went belly up, would be left.

They can manage $52b in property, but if the bank has first dibs and they cant pay the interest then they are in deep trouble.

Saying that the forecast will drop to 40.6c from 47c means nothing as the day of truth is still far away. What is more telling is the cancellation of the Dec. 07 payment.

I dont know a lot about debt structuring, but if they have an EPS of 40c shouldnt their SP be a conservative $4 approx?

Based on 'simple' fundamentals they look oversold to me, but i dont know much about how debt affects them...

prawn_86 said:

I dont know a lot about debt structuring, but if they have an EPS of 40c shouldnt their SP be a conservative $4 approx?

Based on 'simple' fundamentals they look oversold to me, but i dont know much about how debt affects them...

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It really does not matter, this company is in serious trouble. As I said above what they predict and what is real are the issues.

The market recognises a business that is haemorrhaging and Centro is!

Hi guys;

I work at CNP/CER (and don't worry, I am not privy to market sensitive info regarding the current situation) so I do have an insight into CNP.

The issue for CNP at the moment is if CNP can refinace the short term loan facility and at what cost to our services business (ie funds management, development fees, lease fees etc). Higher debt will eat into the margin of the services business and this is the premium the market has been discounting over the last 6 months as this was where the distribution growth was to come from.

Centro still 'owns' a significant percentage of the underlying assets of the business and these assets (especially Aussie retail but even the smaller US retail properties) are perfoming as well as ever. Aussie cap rates are 5.75% for a regional centre. There are very many buyers looking for retail property returns and this will hold no matter what the global outlook as these returns are non discretionary (as they are anchored by long term supermakets/discount department store leases) and are much sought after by super funds. Current sell down seems to have overlooked this at the moment which is understandable given the concerns over rolling over the debt.

Centro has been caught out with having a bullish and complicated services business model at a time when global credit markets have frozen up. Banks will not refinance at the moment unless it is at a significant permium and the New Plan bridge facility needs to be rolled over. So it is fair to say CNP is a 'victim' of poor liquidity management along with Citi Bank, ML, Deutsche, Rams, Northern Rock etc.

No idea what will happen but the outcomes are fairly obvious as alluded to in this mornings announcement and will be known within 2 mths. It's been a tough old lesson for the senior managers over here though - from market darling to market pariah wihtin 6 months. Got to love these efficient capital markets.

prawn_86 said:

Based on 'simple' fundamentals they look oversold to me, but i dont know much about how debt affects them...

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Lol, you could say they were oversold before they went into trading halt too.

Ignore the fundamentals and focus on reality: its share price .

http://news.theage.com.au/centro-securities-plunge-70/20071217-1hhy.html

Centro securities plunge 70%
December 17, 2007 - 2:37PM

Centro Properties Group has become the biggest local victim of the US sub-prime mortgage crisis after higher funding costs forced it to downgrade of its distribution guidance, causing its shares to plunge by more than 70 per cent.

Australia's second largest shopping centre owner has downgraded its full year distribution guidance by 14 per cent to 40.6 cents, from 47 cents.

It also announced it would not pay a distribution for the first half of the 2008 financial year as it revealed it had failed to refinance $1.3 billion of maturing debt although.

Centra has obtained an extension until February 15 to refinance the debt.

The market was already expecting bad news from Centro, which went into a trading halt last Thursday, citing the need for "revised earnings guidance.

But Monday's announcement was far worse than investors expected.

By 14332 AEDT, Centro stapled securities had fallen $4.11, or 71.93 per cent, to $1.60. They closed trading at $10.02 on May 7 and have gradually slid since then on concerns about the level of debt used to fuel the company's rapid United States expansion.

Centro told the stock exchange its 2007/08 earnings would be hurt specifically by the increased costs associated with the extension of the debt facilities until February, and the expected costs of the refinancing.

"In addition, restrictions imposed on Centro's capital expenditure under the terms of the financing extension will restrict Centro from carrying out some of its growth plans in the United States which had been expected to generate higher earnings," the firm said.

Centro has rapidly expanded in size since November 2006 with its funds under management as of June 30 at $26.6 billion, up from $11.5 billion just 12 months earlier.

In July 2006, Centro paid $US1.83 billion ($A2.1 billion) in equity for Heritage Property Investment Management. The deal came with an additional $US1.4 billion of debt.

In February, Centro and one of its listed funds, Centro Retail Trust, bought New Plan Excel Realty Trust Inc for $US5 billion ($A5.8 billion), which included a $US1.3 billion debt component.

Centro said it would consider selling Heritage and New Plan to reduce its gearing levels, which it needs to do to secure the new financing by February.

"That really is an integral part of the strategic review that the board has committed to undertake," chief executive Andrew Scott told journalists.

Centro will also consider selling some of its assets into joint ventures, and said it had already received some interest from potential investors.

"We've certainly received a number of approaches from various parties," Mr Scott said.

Centro has recently come under heavy criticism from brokers over its lack of disclosure to the market about gearing levels, particularly given the current parlous state of credit markets.

UBS Investment Research property analysts Simon Garing told AAP earlier this month that the company had a gearing level at one point as high as 70 per cent, although this was not obvious from the company's accounts.

"When you look through their accounts into sub-trusts, it is heavily geared," he said.

Centro said it hadn't warned the market of any potential trouble earlier than Monday because in August, when the sub-prime crisis started to push up borrowing costs and drain liquidity in debt markets, it believed that long-term refinancing would be available when it needed it.

"We never expected, nor could reasonably anticipate, that the sources of funding that have historically been available to us and many other companies would shut for business," chairman Brian Healey said.

Centro said that in August it completed a $US300 million, 10 year commercial mortgage-backed security issue "on reasonable terms", despite the fall-out in global credit markets.

This had given it confidence that it could wait for debt markets to settle before returning.

"Up until late last week, we were of the view that our short term debt obligations could be refinanced on a long term basis," Mr Healey said.

"While we understand the difficulty that this presents to our security holders, the underlying retail property assets and performance of the business remains strong."

Last week Centro had a market value of $4.8 billion and was worth close to $10 billion in May.

By 1433 AEDT Monday, it was worth about $1.35 billion.

Higher funding costs in short term debt markets recently brought non-bank mortgage lender RAMS Home Loans Group to the brink of collapse, and forced it to sell its franchise network at a firesale price to Westpac Banking Corporation Ltd.

hacheln_mice said:

Lol, you could say they were oversold before they went into trading halt too.

Ignore the fundamentals and focus on reality: its share price .

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Yup. Went short this when I first heard it going to poo on here. Didn't expect it to be such a massive earner. May well gap down tomorrow as well. Insane.

chops_a_must said:

Yup. Went short this when I first heard it going to poo on here. Didn't expect it to be such a massive earner. May well gap down tomorrow as well. Insane.

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:topic Hey Chops,

Can you short on a trading halt? or just when market reopens?

I am about to spend some more time researching CFDs and Forex, going long shares is looking far too risky for the time being....

wayneL said:

ROTFL!

Analogous to someone saying: Besides finding out about the liver cancer and Crohn's Syndrome, I'm in excellent health!

LOL

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It's called "Ostrich Syndrome" .... CNP closed at $1.36 - DOWN 76% from Friday's close!

On a more serious note (can it be more serious?) I wonder how many other Aussie companies secretly "in the poo" are about to let the market know "we can't get bank finance" either?

Sigh....

AJ

I wonder what is up with this trade?
@ 16:27:38 Price: 5.700 Volume: 132,754 Value: 756,697.80

Seems so strange!

surfingman said:

:topic Hey Chops,

Can you short on a trading halt? or just when market reopens?

I am about to spend some more time researching CFDs and Forex, going long shares is looking far too risky for the time being....

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I assume it's the same as any other pre-open or whatever. I'd look at other options than CFD's though.

Oversold? Its still a solid earning company right? Anyone here buying it today? Im not exactly all that clued up on property trusts